RDVP Class (11/15/2004)

With our project business plans due at the end of the week, our class focused on discussing the form of what was in the business plan for a social venture. Greg, voice still shot, started us off with Hank Chesberow (?)’s pieces of a plan:

• Value Proposition: Why do customers want your product/service?
  
• Value Chain: How do they get it?
  
• Value Network: How do they use it in their context? What are the related products?
  
• Profit / cost: How do you make money / cover costs off of it?
  
• Partners: Who collaborates with you to serve the customer?
  
• Competitors: Who else is trying to serve your customers?
  

Dipak simplified it further to answers to 4 questions:

1. What are you doing?
   
2. Why?
   
3. How will you measure its success?
   
4. How will you accomplish it?
   

Mans talked about Reuters’ decision in 1988 to pursue a policy of open systems. He felt that they had clearly given up some revenue that a proprietary system would have generated and the open system had exposed some of their intellectual property to competitors, but, on the whole, had been a net gain because of additional customers that they had gotten for supporting the open system (those that wanted to leverage some of Reuters’ work.)
Dipak asked about how to account for the profit model in a social venture, and Greg responded that in a “double-bottom line” venture, you needed to run the profit model for both dollars (very quantitative, to show at least sustainability) and your social return (perhaps less quantitative). The best examples of those social returns were in Corporate Social Responsibility studies.
Carlos objected to the “rush for a solution”, questioning whether we could come up with an appropriate solution before truly understanding the context. We need to do subject observations and interviews, let people speak for themselves and document what they say. Greg argued that this is what IDEO prepped us to do, focusing on user-centric design, and reaching an understanding of the value proposition.
Mans won the runner-up quote of the day award for: [Without proper user research] “You risk inventing the problem, because you invented a solution.”
Margarita pointed out that since we were starting from many different points (before the fellowship), we’ll likely end up at different points (having made differing amounts of progress).
Durga chimed in, agreeing that observation really helps, and that the design process for the project should be iterative. Greg pointed out that the biggest challenge of the project was not really any of the particular pieces of the project, but rather gaining and maintaining the momentum of a project, so that even if you got one particular piece wrong, and you “failed”, the project had momentum to live beyond that first failure, so you could try a second or third or even fourth approach, citing Palm PDA’s as an example. Carlos claimed that the rash and range of questions that we were experiencing was evidence that we didn’t understand our problems and user populations well enough and even a small amount of observation would prevent a lot of these questions.
Durga won quote of the day for: “You can’t understand everything about all of the problems, if you tried to you wouldn’t be an entrepreneur, you’d be a PhD student.” (Speaking as a former PhD student, touché, Durga).
In response to Carlos’ suggestion that a map of the actors in the system was the appropriate way to proceed, Greg said that the components of the business plan are essentially that map: customers, value chain and value network.

---

At this point, we turned to Mans’ project. He’s looking to remove the asymmetry of information for those in the marketplace that often results in exploitation of the less informed party. He used Mali as the recurring example, with Moulaye having been his local expert about the conditions there. USAID had established a market information service (broadcast over FM radio). Prior to the service, there could be price differences as much as 50% over distances of just 50 km. Since the service, the markets had leveled out, and producers reported a 30% increase in income. The USAID grant is due to expire next year, and there has been no provision to translate it into a self-sustaining service, even though it would seem to be a market for it. Dipak asked why not, and Mans’ response was largely that they’d been focused on other things, this was a change, and charging for something intangible and formerly free was hard. (Even in the US people are unwilling to pay for content.) Durga wondered whether there were a way to segment the market, and encourage the trader / middlemen (who presumably had the most to gain) to pay for the service rather than try to get the government to kill it. Margarita asked if there were opportunities for quick wins, to which Mans offered that Reuters has a ton of information (at the world level). The Chicago Board of Trade publishes its futures prices for free, and that is valuable information to the though tough for most producers to interpret. Mans viewed the challenges as:

1. Figuring out what to write (format for price information report) and how to distribute it
   
2. Creating new content, that will drive people to collect, generate and deliver the information
   
3. Dealing with a huge amount of information: In Mali there are prices on about 50 crops in each of 20 different markets. How do you reach that level of granularity while still having something that's easy to digest?
   

Mans commented that distributing financial information has the nice property that it can be sliced and diced down to almost any level of low expense. (e.g., the difference between expensive real-time stock quotes and free 20-minute delayed quotes). He was looking for solutions where the producers could be compensated for their participation in the proces of giving market information.

He described the hardware device that he was thinking of: a FM radio TiVo, where market information would be tagged and broadcast, and your device would record only those commodities and regions that you were interested in, for subsequent replay. He mentioned the idea of providing "branded" scales in the market place for data collection. And also was thinking about some more theoretical aspects of the transaction: if you want to separate the agreement of the sale price from the payment and separate that from the delivery, how can you do that? His assertion was that it required the participants to have bank accounts (which is not a given in Mali).

Others made suggestions about the information distribution (what about via paper? Hard to do, because people live far from the market place, but need to decide what goods to bring to the marketplace before they could read a price sheet distributed at the market. What about paper delivered in the village or person-to-person distributed by a network of entrepreneurs? What other types of information could these rural producers provide that would be of value to the global community? (e.g., health conditions, weather/environment conditions, crop outlook) Would there be enough value in that information as an "early warning system" that it would provide an edge for commodity traders who had it?

Margarita also wondered about creating cooperatives among the suppliers. What was the minimal scale needed to achieve bargaining power?